A planned merger between the UK operations of Tarmac and France's
Lafarge is under threat after competition chiefs suggested it could
increase the risk of the cement market being rigged.

There are currently four UK producers of bulk
cement - which is used in concrete, mortar and rendering - and the
Competition Commission said there is evidence the market is not as
competitive as it could be.

'Prices and profit margins haven’t been affected in the way we would
have expected following the big falls in the demand for cement in the
past few years,' said Roger Witcomb, who headed the inquiry into the tie-up.

'We have not reached a view on whether or not there has been coordination in the bulk cement market. But we are concerned that the proposed tie-up would increase the susceptibility of this market to coordination.'

The Commission also highlighted fears over the impact on the markets for rail ballast and the supply of high purity limestone, which is used in reducing emissions from coal-fired power stations.

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It is already holding a separate investigation into Britain's £3.3billion building materials industry and will now look at ways to address its concerns about the Tarmac-Lafarge joint venture.

The two businesses recorded combined sales of £1.8billion in 2010 and are expected to generate cost savings of at least £60million a year from the proposed deal.

Lafarge entered the UK market in 1987 before acquiring Redland in 1997 and Blue Circle in 2001. It employs 2,800 people in the UK and supplies around 50 per cent of the cement market.

Tarmac, owned by mining giant Anglo American, is the UK's largest quarrying company and has been involved in some of the UK's biggest construction projects including Wembley Stadium, Emirates Stadium, the M1 widening, M25 resurfacing and the London Olympics.

It employs 4,500 people in the UK and has a portfolio including 118 quarries, 69 asphalt plants and 180 ready-mixed concrete sites.

The companies have said the combination will create greater value for their customers, given the bigger offer of products and services.

Anglo American said it would continue to work with the Competition Commission to address the issues raised.